The outlook for the Federal Reserve's interest rate cuts is clouded as the 10-year U.S. Treasury yield breaks above 4.5%

The yield on the 10-year U.S. Treasury rose to 4.52%, raising concerns in the market about the Federal Reserve's interest rate cut prospects. Federal Reserve officials indicated that they would maintain the policy interest rate unchanged, as inflation risks have resurfaced and the economic growth outlook remains strong. The money market expects the Federal Reserve to cut rates by 25 basis points in 2025, with a roughly 50% chance of a rate cut within the year. Meanwhile, European bonds fell sharply, with the yield spread between German and Italian bonds narrowing to its lowest level since 2021